Stimulus package: special context need to have a special policy

Aviation is one of the industry proposed to receive special support in the comming time.

Promulgate soon

In the last month, the Ministry of Planning and Investment (MPI) proposed supplementing support policies for people facing difficulties caused by the Covid-19 pandemic. There are many notable points in the package proposed by the MPI. Specifically, a series of strong fiscal policies for businesses are in the package.

The Ministry of Planning and Investment proposed cutting 80% of the deposit amount of travel companies within two years to help create cash inflows, as well as to help businesses to maintain, hold on and have money for working capital and production.

Notably, solutions to support aviation enterprises affected seriously by the Covid-19 pandemic were proposed. The Ministry of Planning and Investment proposed the Government guarantee loans for airlines and research the mechanism for the State Capital Investment Corporation (SCIC) to be allowed to invest in aviation firms.

The estimated resource is about VND 11 thousand billion. The impact of this policy, according to the Ministry of Planning and Investment, is to support cash flow and liquidity for aviation firms, avoiding the fact that these businesses have to declare bankruptcy, which would cause an unstable impact on the economy - society.

Along with that, the Ministry of Planning and Investment proposed reducing value added tax (VAT) on essential consumer goods to stimulate domestic consumption.

Evaluating the proposals for the second economic support package, Assoc. Prof. Vu Sy Cuong, Lecturer of the Academy of Finance, emphasised the important thing was that the National Assembly and the Government must evaluate which sectors need direct support and which sectors must support indirectly, and that not all sectors would be prioritised.

For core economic sectors with great pervasion and influence, if it went bankrupt, many other enterprises would also go bankrupt, so they must be saved first. Cuong also noted that in special circumstances a special policy is required, and it should be promulgated soon.

Need to ensure efficiency and fairness

At a workshop announcing the report on the assessment of the impact of the Covid-19 pandemic and the Government's economic stimulus packages, held on December 2, PhD. Le Xuan Sang, the Vietnam Economic Institute, said the form and the volume of support for large domestic firms depended on the level of State ownership, public utility functions, the severity and difficulties in business operation, potentiality and level of economic influence, especially employees of each enterprise.

The State's acquisition of shares of firms that can recover quickly when the pandemic is under control is a notable choice in ways to support enterprises, such as in the case of Vietnam's Airlines. Sang emphasised it was possible to combine different support methods with specialised capacity for each enterprise.

According to Prof. Le Xuan Sang, economic stimulus packages were not elixirs and could not save all businesses that have faced difficulties, especially when the available budget was relatively limited as the pandemic was still very complex and unpredictable. Therefore, only a few enterprises could be saved by following the most reasonable economic criteria and maximum practicality, ensuring high transparency and fairness.

“The target of the stimulus packages should not and cannot be to save weak businesses to avoid creating a debt burden for the economy, but should only focus on rescuing and supporting businesses with high growth prospects, creating competitive advantages and innovation for the economy in the long term, the level of the industry subjected to rescue must take into account the level of benefit and damage of the industry suffering from the pandemic,” Dr. Sang said.